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Squawk on the Street

News/Business. Melissa Lee, Carl Quintanilla, David Faber. Opening bell market action. New.

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Us 27, Paul Ryan 18, U.s. 17, Biden 17, Jim 13, S&p 13, Europe 10, Ryan 10, America 9, Benghazi 9, Obama 9, Joe Biden 7, Dave Duffield 7, Softbank 7, Dell 7, Robert Shiller 6, Wells Fargo 6, Romney 6, Greece 6, Carl 6,
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  CNBC    Squawk on the Street    News/Business. Melissa Lee, Carl Quintanilla,  
   David Faber. Opening bell market action. New.  

    October 12, 2012
    9:00 - 12:00pm EDT  

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>> 15 seconds. >> 15 seconds. a quick shoutout to the scarlet knights. >> syracuse. we were supposed to play the oklahoma fight song. >> oklahoma fight song with the animal orchestra. >> oklahoma over texas. see if they win. >> have a great weekend, everybody. join us on monday. right now it's time for "squawk on the street." ♪ made it to the end of the week. good morning, welcome to "squawk on the street," i'm carl quintanillaa, david faber, live on the stock exchange. after the contentiousice presid a lot to absorb. sentiments on the way. a couple big bank earnings. then there's europe. congratulations to the eu, winner of the nobel peace prize, and man, is that getting some commentary this morning, as well. our vote map starts with earnings today.
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jpmorgan beats held by strong mortgage loan growth. wells fargo mean time also books a beat. is this enough to propel financials beyond the 20% gain they've posted this year? >> first it was intel, this time amd. amd taking down its revenue forecast as the pc market sees its first decline in shipments in more than a decade. dell and intel trading near 52-week lows. >> best buy on the defensive this holiday season saying it will match internet competitors' prices and deliver out of stock store items for free. and we've got some ipad mini breaking news here. reporting the unveiling, taking place october 23rd, three days ahead of the microsoft tablet, two days ahead of earnings. >> jpmorgan chase reporting better than expected third quarter profits of $1.40, including the debit value adjustment. then there's wells posting q3 earnings of 88 cents, a penny above. but revenues missed street expectations. a lot of discussion, guys, about
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to what degree the top and bottom line really mean. anything here, jim. also some comments from dymond saying the housing turned a corner. >> when i go over the two different quarters, it's clear that wells fargo is not making much -- i'm going to schlag my own position. very clear that wells fargo is not making enough in the interest margin. down 25 basis points, 3.66. that's a dramatic turn from where they were. they were 3.91 last quarter. the average deposits are up big. but people focus on the interest margin. jpmorgan, no such degradation, a strong quarter, can't find any flies on it. ran a great deal, so people want to take profits. jpmorgan came out good, wells fargo has got explaining to do. and that's a very unusual position, given the fact that wells fargo sells at a premium multiple. >> i'm glad you mentioned the net interest margin for wellsing forra. the cfo said he expected a decline, and came out with a 25
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basis point decline. and so that's just a difference of a matter of weeks. so what happened in those weeks, and why are we seeing this big decline, because this eats away at the profitability of banks making loans theoretically. >> also, commercial loans down $1.5 billion. growth and commercial, industrial not that great. it's very interesting to see this, because this is at the crux of the debate. wells fargo is a small business lender. i want to hear from wells fargo. i don't like to take down companies until i know exactly what went wrong. but it's going to cast a pahl on the group. it's not supposed to make mistakes. not supposed to. >> jpmorgan did not make a lot of mistakes this quarter. there was a lot of focus as there tends to be on the reporter call which i was on. london trades. they are not the story any longer. it was a strong quarter for jpmorgan across its different business lines. there was a reserve release of $900 million in the mortgage
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business. importantly, we did have jamie dimon on the record now saying we believe the housing market has turned the corner. of course, his voice added to a chorus of many who said the same. we'll see how the stock reacts. as for a buyback, if you recall, that was speuspended, they want permission for the first quarter of next year, applied for that, but then they need to start over again for next year as of the end of march, and so it's not clear they're going to be buying back any stock until let's call it the second quarter of next year. pending approval. >> they did miss the bottom in the buyback. had a chance to buy all. went in 34.36, but weren't allowed -- >> weren't allowed to. >> so dimon had a great opportunity wasn't allowed to take it. government still in charge. >> have financials topped out for the year, jim? >> no. look, i think what's going to happen is, people are going to come back, the group is this the group -- historically inexpensive. if we get more sprints and more work days, we get more global
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business coming back, i think people will say, wait a second, why did i get rid of the business? wells fargo, by the way s going to own america's mortgage market. is there a point where you have 40% of the mortgaging services and don't make a lot of money? 30% of the mortgage market, never supposed to happen. the founding fathers are rolling over in their grave wells fargo was able to get 30%. they're rolling in their grave -- yesterday i was talking about land's grave and mal's grave, and now the founding fathers graves. >> go wherever you need to go. >> thank you. >> you're welcome. >> wells was disappointing. i would love to see wells was great but then i would be dissemb dissembling. >> the financials is a group trading a 20% over the market. to your point, despite the run, trading at a discount to the markets. the question now, though, turns to technology, jim. and there's been some troubling signs in tech land. you know, we've seen the run in technology, as well, a 20% gain
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in tech overall. >> horrendous. advanced micro, to me, that's just an -- put it with the other $2 companies. throw in nokia. there's no growth -- obviously, this is like saying negative yardage in the nfl. i've got to be careful, because negative yardage means they lost yardage. you're losing in the pc business, getting smaller. western digital, sea gate downgrade, very important, because not just pcs. the tech trade didn't happen. the fourth quarter tech trade didn't happen. you're sitting here thinking the two largest groups in the s&p. >> right. >> and they're not doing well. finance is inexpensive, tech looks like a value trap. >> not good. not good. >> no, not good. >> i've seen a little nuance -- >> periodically, like you, i'm constrained by the facts. you're 100% constrained by the facts. meaning that i think that when the federal reserve is printing money, you're betting against -- >> there's no constraint.
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the truth will set you free. >> i hope it isn't our bite -- let's go into it one particular way to look at this. the federal reserve wants you to buy dividend stocks. these groups don't have good dividends, although intel finally does. and the federal reserve is in charge. there's a lot of people -- the purists will say that's ridiculous. purists, there's no room for purists. i mean, there's only room for the federal reserve telling you to go buy. you don't like this one, then just go buy drug stock. the federal reserve wants you in, the cd rates -- look at the cd rates these banks are offering. >> i know. >> it is what controls. >> it is. it's shocking. >> it is shocking. >> in a lot of ways. >> you're making nothing. >> it's still shocking people are not leaving in droves. all sorts of fixed income instruments. >> look, there's someces of paper -- there's a ge piece of paper that yielded 6%. people -- master limited partnerships, i have one last night, yielding 7.2%. i don't understand why -- what
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are you doing? federal reserve is telling you to buy. the federal reserve, what they have to do, when i worked at goldman sachs, they put on a buy list in the morning. i think bernanke has to give us a bottom -- here's the one he's trying to buy and you should go along, and maybe even front -- geithner gets the buy list. so everyone has got a big buy list. >> 90% of the calls were from fink. that's what david weslake reported. >> really bizarre. >> what percentage -- >> maybe he'll take a job at blackrock. >> you don't know that. how dare you make that charge. >> i have absolutely no idea. >> i just wanted to be outrageous. >> i'm operating in a nonfactor -- >> see what it's like when you're out there like me? >> i'm starting to sweat. >> you regain your come possession, david. let's talk amd. the shares down sharply this morning. the chip maker cut being its third quarter revenue guidance, weaker than expected demand will cause revenues to fall 10% from
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the previous quarter, so a sequential decline. the news comes as the big arrival, intel trading at near 52-week lows and a month ago intel issued its warnings and we're getting negative data points reinforcing the idea that the pc market is in a sequential decline, down 8%. the first decline we will see in 11 years in the pc market. >> pcs are -- bring your own device world, this is the byod. remember bric took over, bric. you're bringing apple. of course, apple is part of the tech cohort, opens every day -- when you come in at 6:30, 7:00, then goes down. i don't think anything involved with pcs, i don't like hewlett-packard, dell, nothing in the guts of a pc. it's not working. people are talking about ipads, the new ipad, they like devices that supplant the pc. these are going away. listen, we're putting 500 million out. it doesn't matter. they were putting 80 million nokia -- remember when nokia
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customers -- rimm customers. it doesn't matter. this is not a winner anymore. >> small with a key board. >> oh, you mean the ultra next whatever book? listen, not reading books and not reading notebooks. i feel strongly anyone trying to catch a bottom in the pc world is dreadfully wrong. the only reason -- let me go so far as to say during the case against intel, what was intel's hope? that advanced micro stayed alive so they wouldn't own 100% of the pc market. intel has got to be worried again. can amd stay alive? >> intel should be worried about itself at this point. >> the fault is not in the stars, mr. intel, it's in yourself. because they missed -- they couldn't beat samsung. once again, i refer to the bible of business, which is the steve jobs book by isaacson where he just slags intel. of course, intel -- apple would rather buy chips from its biggest competitor, samsung, than buy from intel.
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>> can you be a hater of the pc and everything related to pcs but still like microsoft? >> well, microsoft is inexpensive -- no, they're going to have a shortfall. everyone is saying they're going to have a shortfall. >> cutting estimates for the quarter. not standing up to what it was going to be. >> if it's in a pc, i prefer to buy general mills. >> what? >> i'm just giving you -- >> does yours run on cheerios? >> trying to give a complete nonsec which at your. >> what's amazing, the uniformity. there is not one positive data point in the last couple weeks to offset all the hp negative activity, intel negativity, all of the amd -- there is nothing -- >> shocking, no. that's why you've got to go back and say, listen, i want to be in another sector. >> yeah. >> this sector -- i would actually literally go to an improving bank over any tech, other than perhaps -- still some clout. >> while you're on it, let's save time. i do want to get to apple, too.
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best buy is taking aim at ama n amazon.com. trying to match internet competitors. shoppers are browsing gadgets in stores, only to buy them for less online. i guess the only choice they had, guys, was to say will you showroom, yes. how can you get around that fact, jim? >> no, i just bought a tv for my father, 61-incher. >> 61 inches, wow. >> big tv. >> what brand? >> aquos. bought it from best buy and didn't get advantage of the free shipping. and i apologize, dad, i didn't drive a good deal. >> so you didn't go to costco. >> i went to costco this week to buy a 41-incher for myself. hd. >> that's small. >> well, bedroom. and i felt to put that 60-incher -- it's a sense of wrong kind of vegas-like message. >> it's a little much, i agree with you. >> i disagree. you can't go big enough. >> even in the bedroom?
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61 inches? >> my wife and i have this discussion all the time. i'm looking for the san sonic 103. >> 103? >> we're not going to get it, but it would be nice. >> the cost -- how great. here's a guy, you said so great. build businesses where -- i'm for obama. and i'm thinking, does anybody understand how shocking this is to have maybe the greatest business retailer, the steve jobs some say of retailing, saying i'm going for obama because he's better, better for the country, better for business? and steve wynn this morning saying the complete opposite. two great business people reaching different conclusions. >> when it comes to best buy, you've got to remember shall there is that continued possibility of a buyout of best buy from its founder, richard schules. we'll see. that would be a difficult deal to accomplish. but weeks are ticking by, and we'll see whether they can come up with the private equity cash they need to make that happen. don't forget, there will be a large component of financing, even though we have a generous high yield market, that may
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still be not the easiest thing to accomplish. if you even do get there on the equity check, which is very much unclear. >> i don't know. i would rather buy jp hunt. >> really? >> i think there's going to be a shift here. i think one of the things happening in our market, technology is too big a percentage of the s&p. >> falling out of favor. >> i think that's shrinking, oil and gas can be a bigger part of the s&p. i think health care can be a bigger part of the s&p. and what we're trying to do is readjust technology. we were speaking to a tech the other day for background about the notion of the shrinking pe and tech. i go back to the 1983, '84 murder when we first started thinking of tech as a class. and there were people saying, no, it's not. because you see there's sodas and autos. there's consumer package goods and natural resources. and people started -- but fidelity was saying no, tech is a -- tech is a thesis, it's a
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way, it's not dug burrows, not union vac, not ncr, not honeywell. and it feels creative. >> speaking of tech, let's talk apple this morning. a published report saying apple is likely to unveil its new and smaller ipad october 23rd at a special invitation-only event. that happens to be just three days before the street date for mike soft's new surface tablet. also two days before apple releases its own earnings. and the rumor had been that the invitations would go out on october 10th. that came and went without a peep from apple. but, of course, the timing of it is interesting. a lot of apple watchers, jim, up in arms, because october 23rd is a tuesday and not a wednesday. and apparently wednesday is the day that they always unveil products. and so that's outrageous. what does this mean at the end of the day? >> look, apple is trapped in its own personal momentary bear market. a lot of people -- talking with stephanie link, "fast money" --
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discussing the idea that maybe the best thing to happen to apple, it goes down ahead of the quarter, so you will not have a negative surprise, so to speak. this ipad mini, it's not a big deal right now, because apple is caught in this vortex where people come in and short it every day, and been rewarded. and until they had their head handed to them, keep doing the trade because it feels like an annuity trade. >> what happened to the people who said if only i could get it for 10% off? right? you've heard that, jim. >> i think apple is a zero sum game. look, i think the pc is challenged, because of the ipad and because of the iphone. but i really do. look, people still use -- they need these. they need some device. they just -- this device to them is not what they want. >> right. my point is, for all those who wanted apple, a little bit cheaper and said they would get in then, this is the time. and they're not jumping.
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has that mood changed? is. >> unfortunately, that's human nature. people like momentum and want to shy away from something going down. and we've had lots of different peaks and valley apple trades over time. it's been right to do. but people like to buy hot. apple is not hot. i've been doing this series on "mad money." it's like, look, do you want to know what's hot? deago is hot. sherwin williams is hot, johnnie walker red. >> so you can drink it and put it on your walls. >> you would be blind for three days. >> we're buying you the blue for the weekend. >> smooth, but i prefer the single -- >> end where we started. quickly, something we talked a lot about here is the lack of ability to actually borrow when it comes to buying a home. and jamie dimon talking about that moments ago on jpmorgan's conference call saying mortgage standings are high, we need a stronger economy to loosen credit. and he also said the basel
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capital requirements are a huge incentive not to lend to anybody who has less than a 680 credit score. >> i think that's right. the national association of realtors putting out that -- the way a lot of deals get killed, if you're in the real estate market, what you're trying to buy doesn't appraise. what you're trying to buy for more than the last comp. -- obviously the last comp. housing wasn't doing as well so you're struck with previous figures. this is now -- we were buying houses 120% of loan to value, and all the people who did that are gone. so now you have people who are serious lenders basically saying, look, we'll give you the money, provided you have the money in the bank. >> right. we talk a lot about incredibly low mortgage rates but not seeing what we have anticipated. >> right. we ought to wrap this up. >> all right. >> we could keep going. only 20 minutes. >> i wanted to always do this. i don't have what's known as an ifb on "mad money." and there's always these people
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saying jim, stop, stop. like regis did. stop, stop! >> we've got to stop. one of the most anticipated tech ipos is on a cloud. workday was founded by the two former ceos of peoplesoft, o sell to oracle in a takeover. this morning, workday is going public on the big board. we'll talk live with one of its co ceos. and congressman paul ryan didn't sweat last night. we'll get reaction from the man behind the fitness regimen he swears by, tony horton of p90 x. don't go away.
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we are back. of course, jpmorgan reporting better than expected numbers this morning. the conference call involving jamie dimon, of course, the host and analyst asking questions so they could figure out what the numbers really should be is continuing. housing has been an important component, not just of the earnings, but of the question and answer during the call. we talked earlier about dimon saying we see lending standards loosening a bit, but it will take time and regulatory action, as well. he also said they have lowered pricing on jumbo mortgages, auto loans, probably won't change student loans, credit card or commercial corporate loans in terms of pricing at this point. that's the key here. we can talk all we want about free money, but if the banks aren't actually given giving it, then others are not able to take it. melissa. >> all right. last night on "mad money," cramer highlighted his hot list for the fourth quarter, and he's just getting warmed up.
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get ready for his mad dash ahead to the opening bell. and ipo excitement is building as cloud computing firm workday is about to make its wall street debut at the big board. one of the company ceos will visit us after the opening trade. let's look at futures once more as we head into the final trading session of the week. we're looking to add to gains across the board. much more "squawk on the street" straight ahead. smart comes with 8 airbags,r3 a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety.
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appears to be according to evercore some kind of new chapter. >> blowing the numbers away. i wanted to include this, because we mentioned, is there anything in tech working? google is working because it's on your handheld device and linkedin as a way to get jobs. so there is some internet-related technology that is shining here. i don't want to make everything out to be so gloomy. i believe that yelp will also have a good number. i know this is a diminishing universe, but i don't want to portray all of tech as being a loser. >> not everything is a zynga or groupon. jp hunt. >> this is important, because here is a transport. i had thought it would be weak. this is a very big trucking company. they said that intermodal -- remember you see those trades go by, and you see the car -- you see the big trucks on it? that is working. most of their business is with burlington northern. but union pacific has a fabulous intermodal business. i would highlight that. and remember, this is american
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consumer. something is happening here. someone is buying something, a u.s.-based company, don't want to be so negative. again, i want to be balanced. trying to be balanced. >> okay. we'll talk more after a break. when we come back, workday joining the ipo parade. we'll talk about the cloud company and their potentially sky-high debut. don't go away. we don't call this our company, we call this our mission. green toys teaches children that if i have a milk jug and i stick it in the recycling bin it can turn into something new. chase allows us to buy capital equipment to be able to manufacture in the states to the scale we need to be a global company. with a little luck green toys could be the next great american brand.
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trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. cloud-based applications for human resources celebrating its ipo today. we'll talk with the co ceo in a few moments. the medicines company specializing in pharmaceuticals for critical care patients. >> can i just -- i'm sorry, but the post workday is right behind us. so the bid is at 41-43. remember, this is priced above the range at 28. this looks like it's going to be a very large pop for workday here at the open workday, would be the biggest technology ipo
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since facebook went public back in may. and perhaps one of the most anticipated, seeing the space it's in, cloud, human resources, software. >> just so we have a little valuation purposes here, at that price, you're getting the stock at 36 times sales. okay. 36 times sales -- reminiscent of another era? >> yahoo! did trade -- i'm not sneezing at that. >> let's talk about another cloud play people chronically say is incredibly overvalued, salesforce.com. that sells at nine times sales. >> nine times sales. >> so you've got a situation, this is four times the valuation of sales, obviously want to encourage people to buy it in the after market, pay up to 50. because just kidding -- >> let's remind people, you're saying 36 years worth of revenues for the company. of course, you're assuming those revenues are going to increase -- >> well --
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>> almost a double. >> right. >> up 90%. >> right. 16.5 times sales and that's got a 35% growth rate. i like to point these things out, only because we saw another era. 1999, 2001. no one wants to hear -- the last thing you want to hear is it was wrong in another time to pay 40 -- 40 times sales. it's just too -- to me what happened. >> it's company to company and it does seem company to company in this market, more so than the '90s when any banker would take anything public on a business plan. this is not that world. it isn't. >> well, what does it mean, jim, when you have almost every ipo this week doing exceptionally well, when you're looking at the market's worst week in 19 weeks? >> let me give -- i've been puzzlinging on this, working on this for "mad money." here's my take. we sat here and talked about dell and hewlett-packard, and we
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talked about intel, we talked about microsoft. no growth. okay. so when you get something in a sector that is so overweighted and big part of the s&p that has growth, you have momentum funds coming in saying, listen, i've made a ton of money on guidewire, making money on linkshare and linkedin. so as far as i'm concerned, i'm willing to pay, because i don't have anything else in my portfolio that has growth. suddenly you've got these rationalizations and alibis about why you can pay 36 times sales. and they -- well, look, i need growth -- it's growth at any price. which has never been a great long-term strategy. >> we're going to be talking to one of the co ceos after the first trade is made. tune in for that. we'll press him on the valuation. and, of course, software, price to sales is a metric you want to use as opposed to price to earnings. >> up 32% for the first day. and then it rallied 146%. and ultimately, people feel 47%, i can buy this.
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some, david, you may at one point called this the greater fool theory. >> i may have. >> sounds very dave aryan. >> i've said a lot of different things. >> that's why i care about everything you say. >> you're the only one. thank god you're next to me. >> i care too, david. most of the time. amd, by the way, could be the s&p 500's biggest loser for the year. prior to the warning, the stock down 35%. today down another 8%. and taking down a lot of the chip names. intel, for one, trading at a fresh 52-week low in today's session. >> and will they remove amd from the s&p? >> i don't know. >> the larger story is not about amd. it's about cummins, chevron, fedex. jim, have warnings reached a critical mass that tells you the quarter is going to be as bad as everyone suspected? >> let's take fedex. so fedex is an 88, 89, goes to
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84. and then say it's even worse than that. and look at the stock. and where is it? 90. so -- >> norfolk. >> a couple days -- you have a couple days meeting or they go down and norfolk southern -- another good point. so money comes into this market and searches for what's better than people think. i do not want to write off this market, in part because here's cummins. 86 is not 76. >> you said this week these stocks go down on specifics, up on macro. >> yes, they do. >> that means you've got to count on either the data getting them better or the fed continuing to prove it. >> china -- look, china, the vehicle sales just came out for september. they're down 1.8%. here's -- this is a tremendous story, which talking about vehicle sales. r -- japanese automaker sales collapsed. so we don't have anything yet that tells you that china is getting better. but this may be one of those bad news is good news. the chinese government can look at these numbers and say, well,
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we've got to slash our interest rates. so people think about liquidity and they come back to cummins. >> right. >> they buy boeing, because boeing got a big order, and they rationalize what to buy. it's a terrible thing if you're so-called rigorous. because you end up buying things that you don't like that don't necessarily have the fundamentals. but you would rather do that than buy this, and what may end up being 50 times sales. >> now it's 42 to 45, so creeping higher. speaking of which, let's go to bob pisani in the midst of that crowd behind us. bob. >> actually, narrowing now. it's 42.50 to $43. so let's summarize what happened here. i want you to understand the price talk. two days ago, the price talk was $21 to $24. then they increased it to $24 to $26. then they priced it at $28 and right now the indications are $4 $4
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$42.50 to $43. in other words, it's going to open -- looks now, around $42. 100% increase from the price talk of a couple days ago. here's what you've got to know. workday has not been profitable, around for eight years, but the revenues keep increasing every year. remember what i said yesterday, people are desperate for some kind of growth of any kind, including revenue growing. that's why they're willing to pay up here. and remember the theme here about that, about investors willing to pay anything for growth. another thing is their reputation of the company itself. all the proceeds from this ipo are going to the company. they're not going to go to pay down any outrageous amounts of debt. the company doesn't have any debt. think about this. a company with a clean balance sheet, good heavens, what a miracle. then you've got the reputations of the people running the company. you know about these guys. dave duffield, co founders of peoplesoft long ago. they have a tremendous reputation in this particular space. they started workday as soon as they sold peoplesoft to their new competitor, oracle. that gets a lot of credibility on the street. and, of course, you know the magic word, cloud-based computing, managing employee
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data, just do it in the cloud. let's move on here again. still at $42, 43 -- >> $45 right now. >> $45 now it's looking at. moving on, wells fargo. let's leave the investment banking out of it. this is a crowded trade on the housing industry. here's my question. can i get a 2% mortgage right now? have you seen what's going on? the margins were light. jim, you talked about this. and it's a good point. one of the reasons margins are so light, simply because lower mortgage rates are out there. that hurts their margin. great news for the consumer, tough for the banks. i did this. 4.8% mortgage. brought it down to a 3.5% mortgage. good news. the federal reserve is out buying these mortgage-back securities. the prices are going up. so they're turning around, taking my 3.5% mortgage, wrapping it up instead of selling it at par, say 100, they're selling it at 106. making a profit. selling these mortgage-backed securities. but the yield is going down, because they're selling it to
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around 2% right now. hey, can i get a 2% mortgage? i don't think so. wells fargo, please return my phone calls. can i get one? still right now $45 -- $45.5, $46 on workday. guys, back to you. >> $3.625 mortgage. i'm going refinance. >> are you going to say bob m s pisani -- >> he's going to get a 3.3%. this workday, aig, kimberly-clark, four seasons down. very big clients. revenue growth, 98%. let's shift to bonds and the dollar. rich santelli at the cme group. hi, rick. >> hi, jim. the big hoopla yesterday, when initial jobless claims had their 30,000 drop, well, there's rumors every day. you just don't talk about rumors. even some rumors have moved the market or seem obvious. well, everybody -- and i can tell you today, jumped to the conclusion that that air was probably california.
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nay-nay, i say, and california wasn't happy about being blamed. so who is the $30,000 drop? the game goes on. there's only a few states, maybe, that could have that big of a drop. and i have an opinion. but guess what, i'm not going to say anything until we have some facts. if you look at the facts of the marketplace today, interest rates are dropping. and it seemed to coordinate a bit with the number. but also remember, it's friday. things get weird on friday. was the number the mover or was it just the mogul before the market gets to its friday duties? we saw big drops in yields on ten. big drops on yields on 30. and if you look at the boon, and this is what gives you the weekend clue, usually they correlate pretty well, even though their net change is the same, their route to get there was very much different. and even at the euro currency, which is up a bit on the day, but it's down on the week getting close to that 130/40 close, we see it had its big rally before our time zone. last turn i find the most interesting, the s&p saw the number, thought about it and sold off in the futures before the big market.
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jim, back to you. >> thank you, rick. let's check out the energy and metals markets with sharon epperson at the nymex. >> looking at oil prices here with crude lower, right around $115 barrel level. nymex wti crude is slightly higher. and we did get a report the third one this week from a major agency cutting the global oil dema forecast. the international energy agency cut its demand forecast this morning for not only 2012, but all the way through 2016. we're also watching what's happening in terms of, of course, syria and turkey tensions. if you look at the oil price action this week, oil prices continue to be supported by the conflict there and the concerns about possible supply disruptions with all the pipelines in that area. keep in mind, as well, that we may see the spread between bread and wti start to come in a bit. it reached nearly $24 earlier this week. the high of the year nearly. and now it may start to come
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down as we're hearing that bp is actually asked for a license and received one to export u.s. crude to canada. shell has also applied for a license, this could change the dynamic for wti spread down the road. back to you. >> thank you very much, sharon epperson. taking a look at a number of different companies that moved significantly yesterday prior to our reporting here on "squawk on the street." i'm talking about sprint. wanted to go over again a number of the things we do know and things we know not to be true. and things we still have questions about. as soft bank and sprint continue to negotiate a deal, under which softbank would end up with a majority control position of the third largest telecom provider in the country. you can see sprint shares are down this morning. let's start there, shall we? at this point, the best we can come up with in terms of my reporting, at least, and the structure of this, and others have been reporting same. yesterday, remember, we told you, they would end up with something around a 70, 7 5% position in the overall company.
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question is how they get there. at this point it would appear they would be buying primary shares from the company, up to 19.9%. remember, anything above that, you need to have a shareholder vote. according to the rules from the new york stock exchange. so sell 19.9%. sprint is able to raise cash. similar to, you know, a public offering in the sense that new shares then would actually embark on a tender offer to try to take them up. what is the price? well, again, i have to tell you we don't know certainty on price. somewhere around 630, 640, 650 has been the speculation. one question, of course, is will shareholders tender at that level? we shall see. that is the mechanism by which softbank would eventually get to that control position. and importantly, it would not need a shareholder vote either way to get there. now, separately, we also have clearwire shares of which are up yet again. you may recall yesterday i reported that sprint is in
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negotiations to purchase clearwire. that deal will not necessarily occur or be announced at the same time a potential softbank transaction will be announced, which could be as soon as next week if, in fact, it occurs. however, sprint has made a decision internally, according to my sources, it does need to move ahead with an acquisition of clear wire. taking in that cash from softbank will be a significant help to sprint as it then goes about trying to acquire clearwire, a company that it already owns a significant stake in, very significant, but does not have full governance control. something that softbank wants. so you could see a two-tier or two-step process in which softbank buys 19.9% of sprint primary shares and sprint goes out, uses that money to bring in what it doesn't already own of cle clearwire. and then you see the final tender offer under which we get the entire thing. we also have pcs, and i'll get to -- yesterday moved sharply lower and then was up for some reason on these strange rumors that softbank was interested in
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pcs. i can tell you at this point, there is no interest in pcs in terms of anything happening now. down the road is it possible that a softbank/sprint combination would seek to acquire a mobile combination, yes, it's possible if the antitrust regulators would allow it to occur. but nothing going on there as of now. it does not look at all like sprint has any interest in trying to jump that current deal. and don't forget, t-mobile was a part of the sprint/softbank talks when they first occurred this summer. >> surely there has to be someone else who wants it. the ceo of sprint was taking down his position, that was the idea, a big money loser. suddenly the bell of the balance? what's going on? >> people need to control that spectrum, they need it, it is complimentary, a part of the company in a significant way. and by the way, you would bring up cost of capital way lower accident which is why the bonds -- we watched the stock. the bonds have rallied big. >> you are talking that, and i'm trying to think, may? >> i've got to tell you. this is remarkable. the shareholders -- i can't believe they're going to be
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disenfranchised like this. i don't believe hesse will do this to the shareholders. >> you don't think he'll do what to them? >> making sure they're capped. he's capping them with this. >> well, there still would be a public float in this thing. some guys might tender it, and then go out and buy it because they think it will be less. plus you could have two-tiered pricing. >> i just want to go to what's going on behind us. duncan neederour is at the post monitoring the first trade and it's creeping higher as we get closer to this thing going. 46.5 to 47 is the last indication. this price at 28, which was above the already raised range. so raised its range, priced above and now looking to open at $46.5 to $47, the ceo of the new york stock exchange in the crowd back there at the post as they are trying to open this -- the biggest tech ipo since facebook. >> priced facebook 18, 19, we would be at 36. >> the dual class voting
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structure. ten votes a share, class a has one on workday. >> so is there anything that makes it so this is a reasonably priced situation? in a vacuum? not just -- >> in a vacuum. >> is there anything that makes you say, listen, the rest of the market is too cheap versus this? generous. >> one thing everyone raises questions about, things like what zel told "squawk" the other day that corporate i.t. cycles are elongating, that companies don't want to make big i.t. decisions. this is a bet on this very thing. >> they save you money, we know that. going to the cloud saves you money on payroll and procurement of financial management. again. thing what's going to happen, a spade of articles next week saying the market has gotten out of control. and yet here a week ago we thought the market was out of control, really -- this is the by polar nature of the market. >> especially given that workday is within the technology sector
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on a technical basis, it looks like there are signs of concern out there. 27% of the s&p 500 technology index is trading at three-month lows. only 47%. so less than half the technology index trading above the 200-day moving average. >> but in the terms of the creative destruction, the tsunami that andrew grove talks about and only the paranoid survive, this company wrecks a lot of the business models in tech. this is an anti hardware business model. this company, you bring it in, rip out your hardware, save a lot of money. and that is terrific. >> i saw the static the other day, the amount of data companies are going to generate this year is more than the past 30 years combined. and that will be used to help save money. we're going to take a quick break. i promise you, this will not start trading while we're in break. >> you promise that? >> i may have to break that promise later on. back in a very short moment.
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we're awaiting the first trade on workday. wday. and it looks like $47.75 will be the opening price, which, of course, would be about $20 above
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where it it priced last night. and that price was already above the range which was raised two times. you hear the crowd behind us -- >> 157 million -- >> morgan stanley, right? >> morgan stanley and goldman sachs. >> think about the -- they obviously didn't want to price this thing at some level that was absurd. they priced at a very high level of sales, the highest of companies i follow and yet taken to double the level of multiple to sales. so there's morgan stanley trying to be responsible. i slaged them on the facebook. well, they tried to do it right. >> carl brought this up. is this reflective of a certain level of speculation in the market that's only contained in a handful of names coming public? because you're not seeing this broadly in technology. >> no, you're not. reminds me of the u.s. robotics era, a handful of modem
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companies. remember copper mountain and those traded at 100 times sales. and, of course, ode to live on copper mountain, did not work. >> right. let's check in with bob at the crowd near the post. bob? >> well, a little bit of drama going on. normally ipos open near 940. what's happening this morning, every time we get close and they're ready to close the book, and that's what happened, the specialist over there -- used to be called the specialist, said we balanced off the buy and sell order, time to close the book. he have time they have they have gotten to the second of closing the book, someone ups the ante. so now at $48. bear in miami-dade, two days ago, price talk was 21 to $23. at this point, we were just ready to open about one minute ago. and somebody raised their hand and put in an additional offer. so it keeps changing at this point. we're getting close. i assure you, within the next several minutes.
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>> $47.50 right now. this is a -- >> cloud goes positive, sales force goes positive. just people looking for analogs. >> s&p up 1 1/4%. again, you can see duncan needer our at the post speaking to the importance of the ipo stock exchange. the biggest technology ipo since facebook. and we were talking about how, you know, maybe a year ago we would have assumed that a company like this would have gone public on the nasdaq. so -- >> david duefield owns 82 of the shares. and -- >> where does that stack up against mr. hoodie? >> those are all class b -- well, yeah. those are class b. of course, 137 million class b shares. just trying to go through some of the -- >> drinks are on ben tonight. >> i think it's a very good day for them.
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>> they're buying, for sure. >> not holding back -- >> this is, again -- i think we've got to keep talking about the disparity between old tech and cloud-based tech, of which this is now -- jumped the cue as being the best cloud-based tech company out there, which is amazing. here is guidewire not going up -- >> you raise a point, jim, about the degree to which this is above their range, above the pricing last night. and how that's going to set off a spade of stories about how the market is frothy. but facebook was all about, oh, it went down. is there an in between? is it -- you would think this would be positive and would help erase some of the pain from last may. >> let me be morgan stanley's worst nightmare. they left too much money on the table. they left too much money on the table. they didn't do their job. listen, their job may -- impossible. >> $48.05, bob pisani tells us. $48.05. >> all right. >> 8:05, there you have it.
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up 70%. 70%. the biggest technology ipo since facebook. quite a day for those shares today. >> how much is apple up? >> apple is flat. >> yeah, apple is all-tech, dave. this is new tech. this is new-new tech. >> let's get over to bob. >> yeah, remember, $48.05 and a lot of drama here but certainly very good news for the company. and as melissa noted, duncan over there with dave duffield shaking hands. the importance, 21-23, revised up 24-26. and then they price it at 28. and you see it here opening at $48. and 5 cents. of course, dave will be here later talking about what's going on with the company. but the key thing is the presence of these two guys here has been a major factor in the comfort level of investors in this stock. and, of course, the famous cloud computing moniker, as well. should note a couple other
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companies did go public, although not quite at the level these went at this morning here. so overall, a fabulous week for ipos. four yesterday, priced -- and closed 20% above their pricing level. and, of course, this one today so far a virtual home run. guys, back to you. >> people at home are probably saying, how come -- i didn't get 100 shares of workday. and the answers are these are allocated toward big mutual funds. secondly, the mutual funds got very little. each one got a little bit. so now they're coming in, in the after market, and to complete their position. so if they got, say, 10,000 shares, they had to come in and buy another 10,000 -- >> the inverse of what we saw before. >> that's my point, exactly right. the inverse. >> there it is. like watching a new capital system being born. $48.05, the initial price. and we'll talk to the co ceo after a short break. >> they're job creators. tween le numbers... ...and listening to your instinct.
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congratulations. >> thank you very much. >> we were charting how you price and whether you thought of raising the range once again. why did you leave it where it was when you saw the stock up 60%? >> we priced it for the long-term. we priced it on thein trensic value of the company and we're very happy where we priced it. i think our bankers did a terrific job. >> you say you priced based on what the fundamentals of the company were. we were talking about valuation of similar stocks in your sector. right now you're trading at approximately 36 times sales, and that is a steep premium to your closest competitor, which would probably be a salesforce.com or even bringing in others. is that the fundamental picture you see that you are, a premium to that degree compared to your competitors? >> you know, i'm not an expert on the premiums. and by the way, sales force is a very good partner of ours. not a competitor. mark bennyoff is a good friend. we got a good market opportunity. still in the early days so there is a lot of opportunity for us
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to build a very big company. >> i think that people should know what you do. the customers love you. if you -- here's a company -- kimberly clark. we know what they do. salesforce.com. just say how you save kimberly-clark money. >> so this whole shift to the cloud is really a big deal. we basically take what used to be these old, ugly applications, move them into the cloud, provide them with the consumer internet style user interface. take care of the painful upgrades. and these are systems that run your hr, run your financial operations. we make those fun and save the customers about 50 cents on the dollar from what they used to spend. >> these are just expenses that have historically kept businesses down. so they bring you in, and they can have a better quarter. >> exactly. >> we keep hearing anecdotally from some executives that the enterprise cycle is lumpy or corporate i.t. decisions are stickier, taking longer. is that just seasonal? or is it about the fiscal cliff? do you have a theory behind if, in fact, that's happening, why it's happening? >> i think if you have a great
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value proposition for customers, there's always i.t. dollars to spend. and our sales cycle today is six to nine months. it was six to nine months two or three years ago. >> has not changed? >> not changed. >> the people saw the acquisition as one of the great corporate sagas in this american business. does that experience color anything happening here today? >> you know, this is a new chapter. we were really excited and starting workday, and this is about workday. that was a great company. but i feel like we're building on where we left peoplesoft and moving on to workday with great technology. same culture, though. my co founder dave duffield brought to the company. y. you could have raised more what are you going to do with the money you have raised? >> we're going to use it very carefully. he we want to invest in growth, new products, new markets. growing internationally, relatively focused on north america today. we're going to invest in going into the global markets. >> how many people do you currently have employed? >> 1,500. >> how many do you think you'll hire over the next year?
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>> more than 500. >> more than 500. so over a third. you've been an extraordinarily wealthy man today, that may include exercise of options. are you going to wipe that -- >> a lot of that is actually the voting trust that i have with my co founder, dave duffield, those are our shares commingled. >> thank you for explaining that. nonetheless. the point is the same. is that going to change anything for you? >> no, not at all. >> 181 days -- 137 million shares come off lock-up, that's been a big concern for companies that go public like this and have such a run-up. do you expect a lot of selling at that point in six months? >> you know, i would hope some of our employees take some money off the table and take care of mortgages and take care of their kids' educations. but i'm in it for the long run, dave is in it for the long run, no selling shareholders as part of this offering. actually, i think it will come out our board members bought in the offering. >> i think it's really important. i'm sitting here talking about
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the valuation. but everything you did, and everything your banker did was to not have froth. you brought 14% public. it wasn't like you brought 5% public. you never presented the thing as something that should sell at 100 times sales. my hat is off to you. a lot of guys sit there and i think that they were going to hurt people -- people want to get hurt accident pay too much, that's different. but you didn't do anything that stoked this. that is very valuable for people to know. you didn't. >> thank you. >> judging from the crowd that followed you here, you're going to be carried off like lombardi if you're not careful. walk out on your own power, okay? >> thank you, thank you. i want to say hi to my dad who watches this show every morning. thank you. >> nice conversation. tonight on "mad"? >> going over hot stocks that will not be as hot as this one. but what managers really want. growth, growth, growth. >> all right. >> a lot more "squawk on the street" and back in just a
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we did, bob. we did. got it.
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want to bring it back to the banks. of course, jpmorgan and wells fargo both out with their third quarter results this morning. jpmorgan did beat what had been expected, at least by the analysts who followed the company. jamie dimon finished up a conference call with analysts.
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we were on the call and here with more. kayla. >> hey, david, jpmorgan ceo jamie dimon fielded a lot of questions. some of those at the top were about qe 3 and whether it helps the bank's bottom line. he said the uptick you saw in mortgage origination is offset by lower rates but said the fed actually isn't the focus. >> i think they're doing their job not to help banks or hurt banks but trying to drive the economy and drive jobs. if that works, it's a good plus. i personally think the fiscal policy is going to be more important than the fed policy soon. the fed needs help from -- with rational fiscal policy. >> tackling that all-important fiscal cliff he said the investment bank will be most sensitive and that fourth quarter woes could drive volumes there down dramatically. the bank's so-called war room to address the issue is largely to strategy jazz for clients, not for jpmorgan. where the banks own earnings are concerned, analysts pointed to a decline in net interest margins and a worrisome feeling of quote, possibilities for reinvestment in a low-rate
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environment. so that margin unlikely to improve any time soon. but two reinvestments dimon is looking at, one is lower credit borrowers. dimon quoted a cliff created by basel iii that disincentivizes people with a lower score than 680. the other is jpmorgan's own shares. dimon saying the bank will reapply at the beginning of 201 to buy back its shares and should do, quote, substantial repurchasing next year and still hit those bazel three capital targets. finally, on litigation, dimon said he doesn't expect additional reserves to deal bear stearns. he made that quote again, melissa, again about how in future crises, this is setting a bad example for help of big companies like a jpmorgan to actually come in and help here. of course, he's referring to the new york ag suit, and those
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lingering liabilities there. but wouldn't go any further on that note. >> all right. kayla, thanks for that. let's dig deeper into the banks reporting today. it's wells fargo in addition to bank of america. bringing in thomas alonzo and anthony pell lini of raymond james. it appears to go the bigger surprise with the stock down 3%, going into this earnings report, there were a lot of expectations that wells fargo is the best of the best when it comes to the banks out there, and they're going to get a boost in mortgage lege lending. when it came down, mortgage banking down 3%, and net interest margins fell more than the cfo had predicted a few weeks ago. anthony, where do you stand now on wells and what was the biggest surprise out of this report? >> i think the net interest margin was clearly the biggest down side. some of it was explained by the fact that they had better than expected deposit growth. but the negatives from qe 3 were prevalent, commercial loan growth is slowing.
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that's probably why we had qe3 to begin with. the economy is slowing. and also, the persistently low interest rates are going to eat away at wells fargo's net interest margin. that said, they have natural offsets in mortgage banking. and they were still able to beat the street by a penny. >> anthony, you have a strong buy rating and you just recently upped the price on wells to $43 up by $3 at the beginning of this month. were you a little bit caught off guard by this report and do you think this should cause investors to reevaluate what they're thinking about wells? >> i think today's negative move is exaggerated. i would view it as a buying opportunity. the company can company's profitability ratios and top-line growth still rank among the best in the business. this is why you want to own wells fargo. these are challenging times and you have the right management team to guide you through these times. >> thomas, you've also got an out-perform rating on wells, a
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$40 price target. should investors use this weakness to buy or do we hit the pause button these mortgage lee see the negative impacts of qe3 trickle in? i think for wells fargo, part of the issue in the quarter was the fact that they sort of pulled back a bit on what they decided to sell and put $10 billion of originated mortgages on the balance sheet which impacted some of the revenue from mortgage banking. on a go-forward basis, we still like the shares here. i think it's a good value and think they're one of the better position plays in the banking market, considering the strength they have in mortgage banking. and the fact that that gives them a time to sort of build the balance sheet to handled off to the net interest line item in a way that has a way to grow earnings on a go-forward basis. >> tom, shares of jpmorgan not doing much today, looked like a good quarter. is there anything that caught your eye giving investors pause, or is it simply the fact the stock has moved up so sharply? >> i think it's the latter rather than the former. if you look at the numbers, investment bankers ing, the
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retail services line solid. most of the underlyings were good. i think what you have here is the stock had a decent run, as you noted and without actually really blowing the cover off the bowl or giving people to get super excited about, set up for' pullback. that being said, we continue to think jpmorgan at eight times next year's earnings is a solid buying opportunity here and we continue to put money into the shares. >> anthony, what do these two reports tell us about the bank earnings to come? >> i think if you have a large income stream that's related to mortgage banking or market-related revenue, you might do better than if you're a traditional bank, you know -- depending more on spread income. so i think some of the regional banks, you know -- the southeast might have better than expected loan growth still, because they're coming off a lower base. but in general, a slow down in commercial lending and margin compression will affect some banks even more than they affected wells fargo. like i say, wells has a diversified business model, they
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reported a positive earnings surprise. but i think some of that honeymoon period of qe 3, where the stocks kind of rallied, even though the news was not necessarily good for the near-term revenue outlook, you know, may start to impact the stock prices negatively. >> anthony, can i ask you a consumer question, really. can i kind of flip the discussion around to what those that are taking out the loans and get at the motment. you seem to suggest at wells fargo, they're doing well at mortgages. the question i'm driving at, are these two banks in different ways, perhaps, not oregon are they passing on the reduced cost of funding for those loans into those mortgages? what is happening to the net interest margin compared to where we might have been two or three years ago? >> well, i think margins are certainly lower now. and that has really everything to do with asset yields. no matter how much volume you put on, you're typically putting on loans at lower yields than
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your average loan yield. so the margins have nowhere to go but down. the whole question is, what happens to the price times volume story. and also, what other niche businesses are you in that help you offset. obviously, everyone is reducing expenses, wells has mortgage banking. and we're countsing on wells going for the to have more volume on the commercial side. although we did take a step back this quarter as the economy slowed. >> so when the cfo of jpmorgan says on the conference call they expect only modest pressure on the interest profit marge's over the next several quarters, why is that different? >> well, jpmorgan's revenue stream is much more geared toward market-related revenue. and i would say wells fargo in general looks more like a typical regional bank. whereas jpmorgan is more of an investment bank. jpmorgan's results bode well for goldman. morgan stanley, merrill lynch. they don't necessarily bode well
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for other large regional banks. >> bank of america, merrill lynch. all right, guys, we'll leave it there, thomas and anthony. >> thanks very much. still ahead, robert shiller of the case-shiller housing index will give his thoughts on whether housing's days are over for good. >> and as we go to break, another highlight from last night's debate. more people signed up for medicare advantage after the change. nobody is -- >> mr. vice president, i know -- >> no -- >> mr. president, i know you're under a lot of duress to make up for lost ground. but i think people will be better served if we don't keep interrupting each other. [ male announcer ] how do you make 70,000 trades a second... ♪ reach one customer at a time? ♪ or help doctors turn billions of bytes of shared information... ♪ into a fifth anniversary of remission? ♪
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...so they can inspire our students. let's solve this. ♪ citigroup making a big bet on the united states. the firm upgrading u.s. stocks to overweight. so why is citi so confident? joining us on the set, tobias, good morning. >> good morning, how are you? >> i'm actually slightly confused. spent much of the morning poring
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over this research. cnbc producers go swinging in all directions with excitement. you sat here, one month ago today, the 12th of september, and you said to us that your year-end target for next year was 1615 on the s&p. so a look at this thundering new vote. now you've upgraded u.s. secretaries equities 1615. the target is the same. i don't understand. what's going on? is this about downgrading japan? >> i think part of it is about downgrading japan. part is the earning revision momentum, changes around the globe, where the u.s. was where everybody else was, if you went back a few weeks ago. as everybody was downgrading earnings trends. and now the u.s. has kind of started to separate from what we're seeing around the world. and that does make sense to some degree. >> but to be clear, your view on this market is constant and other things are falling away beside you. >> to some degree, that's true. yes. the global call, which is what we're talking about here, is
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actually made out of our london-based team as opposed to my view in the u.s. to go back further, if we go back to december of last year, we -- they apparently love that. the raging bull thesis, the idea that the u.s. was going to enter a secular bull market, 12 to 18 months later, which would be next year already. and i think to some degree, people are starting to realize housing is turning. we continue to see the expansion of technology through smart devices. we continue to see growth in our energy boom, if you like, through tide oil, shell gas, et cetera and also seeing manufacturing competitiveness coming. but there is a little lag between when we were saying it's 12, 18 months away, and we're now -- call it six weeks away. >> you forgot to mention something else they note in here, that you believe the fed is going to be more proactive than the other central banks. and in here you note that real interest rates, real interest rates, when you account for
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inflation, are minus 1.5% at the moment. >> right. >> that's why you've become a railinging bull. >> well, i'm less about just liquidity. we could argue this literally all morning. and probably well through the weekend. is the market up solely because of qe 2, qe 3, or is earnings up, is consumer spending at levels above those of 2007, are margins continuing to show really impressive gains. all these things are happening, too. it's not just about liquidity. liquidity does give you some, if you like, floor support. in other words, you don't collapse in liquidity environment. i'll tell you, one step further, if i may, there is this concept, and it's a little complicated called the mar shalian k. if you have greater liquidity than can be absorbed by the economy. it works wonderfully if you're looking at emorninging markets. it doesn't work wonderfully in the u.s. because there are other assets to go to. real estate, commodities, currency. it doesn't have to go to
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equities. it's more limited in emerging economies. >> let me ask about the sectors you like in this march higher than 12% by the end of 2013. financials, information technology, tell com and utilities. telecom and utilities seem surprising and i'm surprised the materials and energies aren't entries in this, if you are expecting secular bull market to really kick in next year and for there to be growth out there. >> there are a lot of questions that i'm not going to have enough time to address. but when we do our work on the sectors or industry groups, we do it at those group levels. i'm not going to tell you i know what gdp is going to do next year so therefore buy this particular group. my forecasting abilities could be questioned. on the other hand, what is the valuation of a group telling us about how they have historically performed? what's happening to earnings revision momentum? what are lead indicators that drive those specific stocks? so there's like a defensive and offensive combination in there. those are more bottoms-up, less top-down in the way we do the work.
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i want to take it a step further, materials and capital goods, particularly an old favorite area of mine, having covered it years ago, and jim cramer never let's me forget that. the -- that exposure is more about what's happening in emerging economies r they growing more rapidly. your concerns aren't about the u.s. economy, might be about the chinese economy. number two, if you look at europe, the three cyclical industry groups that have the greatest exposure to europe are autos, materials and lastly capital goods. i'm not that worried about phrma being exposed because people still need drugs but they don't have to go out and buy copper. one last point, and i know you're edging to get in -- >> only about picks. you've got a top 20 and it's quite echeck particular. >> we tend to look at what our analysts are recommending and i don't want to say we just give it to them, because we do look and put some sector exposure -- i couldn't rattle off the names -- >> let me do it for you then.
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aetna, csx, google, qualcomm, aes, the top. >> and if you look at a few of those, that will fit with some of those sector calls we're making, as well. where we think that those are better positioned. i would add, one last point on this. the aspect about the european exposure is important to understand different ways, because materials in the u.s. is 70% chemicals, only 20% metals and mining. and if you were going to europe, asia, it's much, much skewed towards ls.i actually think met mining is looking interesting. it's more the chemical, that 70% component dragging down what's going on in materials. >> and you feel good about being in semis and semi equipment at a time when we're getting negative data on pc sales. intel and amd a month apart. >> the story for us there is what's happening in semi capital equipment demand. semis are fairly commodity-based. if i ask how many chips are sitting in your smartphone, you
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couldn't tell me or who is in your particular phone. >> she might be able to, but go on. >> it's a commodities issue. these chips are fairly replaceable. in that sense, commodity businesses, are you adding capacity. right now, the industry still not adding capacity. if luke look at capital equipment orders for the semiconductor industry, they're down year offer year. that tends to be a good thing for the way the stocks trade. not necessarily about their earnings, but how the stocks trade. >> good to see you. thanks. >> thank you very much. >> great work. thank you. mean time, congressman paul ryan flexing his fitness chops at last night's vice presidential debate. so what's the secret sauce behind his fitness plan? we'll go straight to the source, sit down with the man behind ryan's p 90 x workout. tony horton. first, rick santelli work on the next hour of "squawk on the street." morning, rick. >> we have a surprise today. we have the award-winner of the msricme group award for innovative quantitative applications. and you know the gentleman well. it's robert shiller of case-shiller. and in a few minutes, we're going to talk housing.
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but, of course, i'm going to give it a little bits of a spin. i want to know, just base it's bottoming, does that mean it's time to buy for a wig big rally. all that's coming up with robert shiller. a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. b on safety.
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one hour into trading. some of the stories we're squawking about. 7:30 on the west coast, 10:30 on wall street. the university of michigan's consumer sentiment index jumping to five-year highs. a mid october reading of 83.1, up from 78.3 in september.
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advanced micro devices, the biggest decliner in the s&p, down 9%. new 52-week low on the chip maker's revenue warning. and one day after surging 27% in its debut, realgy, the parent of coldwell banker and century 21 up more than 1.5% today. now to the cme group for a special and slightly early edition of the santelli exchange. rick. >> early? i say in addition to everything we're going to do on the santelli exchange. welcome, robert shiller. this is the bastion of capitalism you are visiting. and another area of capitalism to the average guy on main street is the investment in his house. >> pretty much the biggest investment he has. do you think housing has bottomed? >> i've been reserving judgment, because i think these -- we've seen rallies that fizzled before. it's not -- once it gets going, it has a lot of momentum. but right now, it could be -- partly seasonal. and it's not -- it's nouft jt
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clear yet. >> we have had a lot of false starts, and you're right, there is seasonalality. i remember mr. greenspan in '05 and '06 saying you don't have to worry about housing in terms of correlations, everything is so dissimilar, so many houses across the country. that probably staved off the bubble effects for a while until it gained traction and then it was a big rock falling. how is that going to play out in we're bottoming when it tries to go back the other way? >> yeah, well, the question is, we have rallieses in phoenix and san francisco. question is, it's really nationwide. in the last few months, it looks like it. but is this -- are we going back to the early 2000s where the correlation across markets got really strong? i don't know yet. it's just too soon to tell. >> now, here where everybody trades everything, including houses, is tradeable in their minds, and my analogy, if we think we are bottoming, if i say we're bottoming in the s&p futures, the question is, okay, i'm going to buy them, because it's going to rally. if we're bottoming, that doesn't
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necessarily mean there's going to be a liftoff, does it? >> well, i think look at the last housing cycle. it peaked around 1990, and it started falling only a little bit. it wasn't as dramatic a cycle that time. how long did it take to take off? a decade. we've been going down for six years now. i don't want to just change -- >> no, i'm with you. >> it might still be going down. and we have a lot of world economic problems that are staring at us right now. the imf just came out with this report about an alarming slow down in the world. so i don't know that i'm -- i just don't see the reason to call this yet a major turning point. >> all right. now let's switch gears. let's pretend we're talking to somebody who doesn't pay much attention, but they might be in the housing market. even though we don't think it necessarily can be called a bottom or it's going to shoot up, if you're looking at a house, utility of living there, pretty much a great time to buy from that perspective, is it not? >> well, the government wants you to buy. and so we've got mortgage rates
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at record lows. and i don't know -- we didn't find that the mortgage rate helps us forecast home prices very well. but it certainly affects your bottom line. and you can lock in a 30-year mortgage rate at practically negative -- negative real rate. but we have negative real rates on tips -- long-term tips. and so it's like money for nothing right now. and so i think some people -- >> i have to stop you there. you just said some phrases that make me smile. money for nothing, i think ben bernan bernanke. and is before that you said low interest rates don't forecast what housing is going to do. in my opinion, that was a very, very kind disthat the low interest rate policy isn't necessarily the medicine that's going to fix housing. it might not hurt it, but it's not going to fix it. would you agree with that? >> so many other things that -- it's animal spirits. and there's no way for ben b
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bernan bernanke, nice guy, well-meaning. i admire him. but how do we expect him to fix it with just one button to push? he's got more than one, maybe. but he doesn't have a way of changing our animal spirits. >> i agree. now, let's even take this a step farther. people on here are all about animal spirits, okay? but they believe that when you have the head of the federal reserve come out and say we're going to keep interest rates at a low level for a very long time, i don't see that building animal spirits. i think most people hear that and go, wow, it's that bad. is he actually hurting the animal spirits? >> it could be. because it's -- so much is psychological. and we have a whole new field, behavioral economics. >> i love that. >> can be paradoxical. so we are -- people are puzzled by this economic situation. we haven't had this since the great depression when interest rates are just stuck at zero. people wonder, how can that possibly be true? how can people be happy with a negative long-term real rate? puzzling. >> see, when my kids go shop,
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they'll see this store that has a sale in their window every day. but the stores that only have rare sales, when they say last day of a sale, my kids run in to buy. maybe if interest rates were thought to be going up you, maybe it would have an effect of getting people -- >> home buying. >> yeah, what's wrong with that? we never hear any of this explored. we have a one-dimensional medicine. >> this, as for advice to home buyers right now, is this urgent? should you buy right away? because a., interest rates might go up or b., home prices might go up and i don't see the urgency. i can see that ben bernanke is right, he'll keep his promises and the housing market won't -- this rally we've seen will fizzle -- i'm not predicting -- >> it's a possibility. >> it will be a bumpy road for years. so take your time. >> you know what, thank you for your objectivity. robert shiller. back to you. >> all right. great. i'm sorry, i'm trying to tweet everything he is saying, rick, as fast as he's saying it. great stuff, rick santelli with
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robert shiller in this chicago. quick market flash here this time in the travel space. mary thompson back at hq. >> talking about travel zoo, the online travel website warning on the third quarter, its stock down 12% as a result. company can expects earnings of 20 to 22 cents a share below estimates of 27. the reason the company has a gap in hotel booking as a result, the company says it's now looking to buy a hotel booking website. we'll see whether that helps. stocks off 12%. melissa, back to you. >> thank you very much, mary thompson. cloud computing opening for trade a while ago. let's get an update on how it's doing. bob pisani here on the floor. >> dave duffield is here, chatting, ceo here and the after glow is still here, like a cocktail party. the important thing is look how we're trading now here. 47.16, still up on the day. and remember, i want to repeat the numbers. 21 to 24 was the price talk. 24 to 26 is what they upped it to. priced at 28 and opened at $
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$48.05. another thing that's interesting and dave duffield, the ceo right here and we were talking a few moments ago is the volume and action here. 8.1 million shares. why is that possibility or interesting? because they offered 22 3/4. normally on a hot issuance when you've got practically a doubling in the price in a single day, the hot money would sort of come in and move around and sell very quickly. oftentimes in these hot issuances, you see 100% of the turnover by 11:00. but look, only 8 million shares, that's about one-third of the actual shares that are offered. it's an interesting sign. and dave, i know we were planning to say anything, but dave, this is the ceo, founder, legendary figure in this business. how do you feel about your first day? >> i feel terrific. it's -- as neil said, we priced this fairly with the bankers. they have done a terrific job. and it's just very, very heart-warming to see the interest that people have in workday. >> priced at fairly, would be an understatement. you must be ecstatic. my point, oftentimes you get
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fast money saying good heavens, i've $48, i'm out of here, yet we're not seeing a lot of -- is this some indication maybe you're in the hands of maybe longer-term shareholders. i know this is speculation but i find it intriguing. >> that's what we hope. we would like to have people invest in our company and hold it for the long-term. we're planning some -- i know, wonderful new products in the future. and we have great people. customers are happy. we're just really thrilled with, you know, the experience and what we were going to deliver. >> we've got to go. but calling ipo people, i just want you to know, a lot of the guys said that one of the reasons we're interested is the strength of the founders and the reputation they bring. credibility on the street, that is what i heard a lot about you and i don't normally say that about a lot of people. dave duffield who joined us impromty. guys, back to you. >> the insiders will be thrilled. ahead in the program,
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congressman ryan and vice president biden trading barbs on last night's vp debates. we'll talk with andrea saul, press secretary for romney, next on cnbc.
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there was laughing, interrupting and attacks from both sides during last night's vice presidential debate. taxes were a contentious issue during the economic portion of that. take a listen. >> there aren't enough rich people in small businesses to tax to pay for all their spending. and so the next time you hear them say don't worry about it, we'll get a few wealthy people to pay their fair share, watch out middle class. the tax bill is coming to you. >> andrea saul is the national press secretary for the romney campaign, joins us from campaign headquarters in boston. andrea, good morning. great to have you. >> good morning, thanks for having me. >> let's get the style out of the way. right? because that's what everybody wants to talk about. it's the easiest to relate to. it didn't take long for the rnc to put together an ad compiling
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all of biden's laughter moments, which people have talked about a lot last night and today. it's been said, if you're going to argue or complain about the style, you lost on the substance. why isn't that true? >> it's not about the style. the reason that vice prest biden smirked his way through the debate was because he didn't have a plan to offer the american people about why the next four years will be any different than the last four. that's the issue. he was bemused at the serious issues that our country faces. and i think when the american people watch that, they see they want a serious leader. what we saw with paul ryan is that he was sober, he was serious. and he could lay out real plans of how we're going to get 12 million people back to work, and get this economy growing again, which vice president biden did not do. >> yeah. one complaint i heard, andrea, was that it was maybe a little too foreign policy-heavy, especially for voters in swing states who were still undecided. did you feel ryan did not have a
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chance or at least a platform to make a case on jobs, on taxes, on the debt? >> well, you know, we talk about jobs every day. obviously, paul ryan went with the topics that were brought up. but he showed his strength on foreign policy. what we saw with vice president biden is he gave a conflicting account than what state department officials testified under oath just this week about benghazi. they said the folks in benghazi had requested extra security and those were denied. and vice president biden said that wasn't true. so this administration continues to mislead the american people and we deserve answers from them on that, and that's going to be something they'll have to address today. >> i was going ask, do you think that will live on as a pivotal issue, do you think, all the way for the next 26, 25 days? >> i think it's more of the fact that this is a pattern with this administration. first they came out and said that the killings of the americans in benghazi was as a
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result of a youtube video and we found out it was a terrorist attack. and they knew that pretty soon afterward. then we hear that security was requested. it was denied. and then vice president biden last night said to the american people that wasn't true. and so this is a pattern with them. why are they misleading the american people? who is telling the truth here? and i think that the obama administration has a lot of questions they need to answer on that today. >> yeah. i want to play some sound, andrea, from our air yesterday. lloyd blankfein, erskine bowls, alan simpson. take a listen. this is erskine bowles. >> we have $7.7 trillion worth of economic events that are going to hit america in the gut in december. and in washington, they're doing nothing about it. nothing about it. we should be asking these guys running for president and every guy running for congress, what
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are you going to do? >> andrea, that's going to be an increasingly big part of this discussion over the next few weeks. is the governor going to make a step, at least to react to the way these two have reinserted themselves in the political debate? >> governor romney and paul ryan have laid out a comprehensive plan on what we need to do to get spending under control. president obama hasn't had a budget in four years. we have seen $4 trillion deficits under his lack of leadership with our debt reaching $16 trillion. and as you know, if we stay on this path, by the end of his second term, should he be re-elected, it would be $20 trillion. that's unacceptable. >> is there a way to say that within the framework of what simpson/bowles are now providing, this time with the involvement of a lot of the nation's ceos? >> well, governor romney and paul ryan, like i said, have laid out a plan, not just to bring spending under control, but to reform our tax code, get people working again. because with more people in the work force, we'll be able to generate more income and that
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will be more money coming in. as you know, right now with 23 million americans struggling for work, many of those underemployed, they can't get good jobs. the amount of income we need just isn't coming in. >> yeah. but what i hear you saying is that it's going to be on your terms from your plan. it's not going to be in any way trying to embrace a revamped simpson/bowles. we know the congressman was on that commission and voted against it. i mean, the campaign is not warming up to it in any way now that we have the business community involved, are they? >> you know, governor romney has said good things about simpson/bowles in the past. but, again, he has his own plan. and his plan is going to get 12 million americans back to work. >> andrea, it's going to get a lot more interesting, look forward to the debate number two at hofstra next week. always good to see you. thanks for coming on. >> thank you. >> andrea saul from the romney campaign in boston. we've talked a lot about the 47%. but what about the 6 to 8% that's reportedly how much body
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fat congressman paul ryan has. coming up next, we'll talk to the man behind ryan's p90x workout, tony horton, next. one is for a clean, wedomestic energy future that puts us in control. our abundant natural gas is already saving us money, producing cleaner electricity, putting us to work here in america and supporting wind and solar. though all energy development comes with some risk, we're committed to safely and responsibly producing natural gas. it's not a dream. america's natural gas... putting us in control of our energy future, now. with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor,
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♪ physical, physical, i want to get physical ♪ ♪ let's get physical, let me hear your body talk ♪ a tough night on the debate stage republican paul ryan flexes much more than his political muscle this morning. this issue features photos of the wisconsin congressman showing up his much talked about p-90-x physique. the tony horton, creator of the p90x workout system. i imagine the ryan campaign thinks this is a bit of a distraction. what does it mean for you? >> it might be a distraction for them but doesn't hurt us at all. it's really fun to have the paul ryan bump. by the way i'm a big fan of the olivia newton-john song, nice work.
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>> so tell me you're a cunning businessman. how are you going to capitalize on what ryan is doing. frankly what we picture him doing now in "time" magazine doesn't look like the p90x workout. you don't use weights, do you? >> yeah, of course you do. you have the option of using weights or bands. we tell folks that they have to buy the dumbbells but you don't need heavy ones. the dumbbells are part of p90x if you want them to be. lot of folks who travel a lot stick wristbands in their luggage and that works as well. >> it is a phenomenal business model with the dvd. are you seeing a continued bump, how is it translating into profits for you? >> the product is close to eight years old and typically any infomercial product especially fitness ones don't last more than two or three years. usually companies put something out there and it will have a little bump and it will go well and drop off and the interesting thing about what p90x has done it's completely broken that
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model because the fact of the matter is, the reason why paul ryan is using it is because it works, the reason why ben stiller uses it is because it works and why ashton kutcher and demi moore use the product because it works, it's popular on military bases around the world. i've been to 31 military bases around the world and i've been invited to share more about what i know about p90x, nutrition and that's the reason why. >> i guess military base is different from where this is now being seen by an awful lot of new people. they have the flexibility, they have the mobility to do this sort of exercise you've got in the video. in my gym the trainers look at this when it plays outen the video screens on the infomercials and worry people are going to get injured. how do you deal with that liability aspect, because there's no hands-on instruction for what are some complicated moves here. >> well p90x has got a lot of modifications. we have muscle confusion, you're not hammering the same body parts day after day so if you use the modifications that are
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there, typically there's something modified and extreme. i just went to five military bases up and down the california coast, a kid by the name of jeremy yost. he weighed 370 pounds when he started p90x and fused right ankle from high school football injury. the only reason he lost 180 pounds is because of the modifications. we had few issues with people getting hurt. people have a tendency to try to push too hard, their ego gets involved with different moves and they might injure themselves. if you follow the program the way i designed it, i've got tom petty in shape and billy idol in shape. >> on the paul ryan photos, you don't have to wear a hat backwards to do p90x, right? >> no, not a requirement. i often wear mine sideways to mix it up. house confusion it's called. >> good to see you, tony, thank you, congratulations again, tony
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horton the creator of the px90. do you do it? >> p90x, no, that's way too hard for me. still to come the obama campaign responds to last night's race, ben labolt will join us live in the 11:00 a.m. hour. oh...there you go. wooohooo....hahaahahaha! i'm gonna stand up to her! no you're not. i know. you know ronny folks who save hundreds of dollars switching to geico sure are happy. how happy are they jimmy? happier than a witch in a broom factory. get happy. get geico. fifteen minutes could save you fifteen percent or more. a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain
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some rare rocks are hitting the auction in new york city and pound for pound they're worth more than gold because they're from outer space. we explain in today's "million-dollar minute." >> the moon and even mars are for sale, in the world's largest meteorite auction ever. >> everything at this auction will be worth in excess of $2 million. >> reporter: prices are sky high for items that are out of this world. this meteorite was found in namibia and could sell for more than $200,000 because it bears a striking resemblance to the painting "the scream." together these chunks could sell for up to $380,000. this rare chunk of mars is called the tissint martian
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meteorite, it could fetch more than a quarter of a million dollars. >> meteorites are extraordinarily rare. if you take every meteorite that exists it weighs less than the world's annual output of gold. >> this piece is ten times more valuable than gold. for cnbc, i'm robert frank. >> that's a lot of money for some rocks. if you're interested in picking up one of the meteorites, the auctions event is this sunday in manhatt manhattan. >> i know where you'll be this sunday carl. >> with my checkbook. >> don't spend too much. >> see you monday, have a great weekend. see new 30 minutes. here's what you missed earlier on this morning. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> bernanke and draghi it's like babe ruth and lou goherrig, the have committed there's not going to be a depression. everyone else is worried, you have tremendous liquidity, you couldn't borrow money four years ago, now money is cheaper than
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it's been and you can have all you want of it. >> that's the thing that's missing in this government, a fundamental understanding of how to reward proper behavior. tax policy in america can cause people to behave in any desirable way. increase taxes and all you do is kill incentive and kill investment. >> but jpmorgan came out good, wells fargo has explaining to do. that's an unusual position. [ bell ringing ] >> 48.05, there you have it. up 70%. 70%, biggest technology ipo since facebook. >> we price it for the long-term, on the the intrinsic value of the company. i think our bankers did a terrific job. >> i just don't see the reason to call this, yeah, a major turning point.
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>> good morning, happy friday. we are live at post nine at the new york stock exchange. the markets have green arrows once again. remember we had this picture earlier on yesterday but had our typical mid morning sell-off once europe closed. we'll see if it lasts. the dow is staging its worst week in about 19 weeks with the dow up right now 38 points. cloud computing company workday of course making its trading debut, up 70% and amd the biggest loser on the s&p by a wide margin cutting its quarterly forecast warning of a 10% drop in q3 revenue. two of wall street's biggest banks out with results, jpmorgan and wells fargo, both reporting beats but the stocks pulling off. is the bank run finally over? the secretary of defense
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warning the u.s. about a cyber pearl harbor, why hackers are the biggest threat to the company. and the startup, weight watchers for your finances, learnvest has been valued at $100 million, the founder and ceo will join us live and in the national press secretary for the obama campaign, ben labolt, will react to last night's contentious debate and how the president is preparing for his second head-to-head with mitt romney, coming up in the next hour. wells fargo beating estimates but missing on revenue, company's conference call is just wrapping up. kayla tausche is monitoring that back at hq with details. >> a tough quarter at wells. the, kr eo expressing confidence in a housing recovery but not as robust as he would like. they expected the mortgage lender to benefit more. non-interest income was down and wells decided to keep $9.8
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billion in fannie freddie conforming mortgages on its books instead of selling them and actually forfeited some $200 million in fees for well. cfo tim sloan said retaining the mortgages actually generates more income than mbs investments do and expects to retain more mortgages in the fourth quarter. sloan also said he expects the mortgage origination rally to last at least a few more quarters and the q4 mortgage outlook is strong. wells took a big hit to its net interest margins, a problem for all banks across the board as the rates remain low but even if its loan book growing it's not growing fast enough to offset how quickly those rates are falling and what type of income it can actually make on those rates. sloan said that the bank expects continued pressure on those margins, which narrowed 18 basis points in the quarter from a year ago, but that the q3 decline was "not representative of what the bank expects in the future." now, low interest rates
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outweighing the benefit of the refi boom for sure, an undisputable point this earnings season and a point analysts raised coming into this but didn't predict it to be as bad as it's been. he's focused on returning capital, wells has the highest return on equity but people are wondering if maybe they had bid these stocks up too high based on where the numbers are coming in. >> it has been quite a run in getting a lot of people's attention today. thanks, kayla tausche back at hq. capital markets op-ed for friday, gary is reacting to last night's debate. >> a true op-ed today. i sat down like many people hoping i'd come here and talk about the ramifications for the capital markets, the financial markets, the stock market after last night's debate, paul ryan you and i had the opportunity in the past frequent guests in "squawk box" in your old role on that show. he knows about the bond markets
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and cap markets but unfortunately i can't do that and here ames the reason why. listen to vice president biden, this is the kind of stuff he wanted to focus on when it comes to the markets. take a listen to this clip. >> we are going to not repeat the mistakes we made in the past by having a different set of rules for wall street and main street, making sure that we continue to hemorrhage these tax cuts for the super wealthy. >> i have a personal problem with this. i'll tell you why. joe biden and i know this to be fact, because i was forced years back to go to one of these fund-raising breakfasts that he had, it's in the public domain, you can see the family contributed $3,000 to the biden campaign in 2007 because we went to one of these breakfasts where he solicited people in the financial services industry. remember, he's from delaware. they've got a huge credit card business, all the money that he raised back in 2005, '06 and '07 i would tell you came from financial services. i sat in that breakfast, i know exactly the type of opinion he had about what wall street meant
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for main street back then. i know it's politics but this is a gentleman now who comes on, doesn't, doesn't in my opinion give any way, shape or form that this is a person who raised the bulk of his money during his senatorial career from financial services. i have a problem with that. >> yeah, he's known for being not a wealthy man. i think for a long time he was ranked the second poorest member of the senate. >> right. >> you're saying he's doing this for his campaign purposes. >> look, he raised all the money. i was, and i've given money, i should say i'm sure "the drudge report" will say kaminsky is giving money to mitt romney in the past. yes, i give mitt romney money but i also gave money to hillary clinton and if you look at all the political contributions i made pre-nbc it was all over the place. biden raised all of his money from the financial services industry. in scranton which he brings up all the time i'm told nine out of ten people will tell you in a poll they don't like the guy.
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he hasn't done anything but he brings it up constantly and i will also say i thought it was rude, i thought it was disgusting and extremely nasty the laughing, the smiling. i got to tell you, if i was paul ryan, i just, i have more respect for paul ryan today than i did yesterday. >> just for having survived the 90 minutes? >> i could not have sat there with the smirking and the laughing. i couldn't have done it. i would have gotten up and punched the guy in the face. >> we had david walker on last night who said the biggest negative points went to biden for not appearing vice presidential. >> i don't know what the american public is going to think. i could only tell you that i have a problem watching biden do that stuff and i have more respect for paul ryan than i did yesterday, than i do today because i don't know how he sat there but the main point of the op-ed today, biden is a hypocrite. the most money he raised came from financial services. stop with the wall street/main street it does not make anybody better off. >> i love it when you get fired
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up. i really do. a quick market flash from mary thompson. >> looking at shares of celgene. the fda granted broader approval of its breast cancer treatment abraxane. it treats the most common form of lung cancer and this could bring in an additional $110 million worth of sales to cellgene's, up 2.4%. >> to the cme group, rick santelli who already had a fantastic interview with robert sh schiller this morning. >> what an absolute guy he is and i thank the cme for letting that happen. yesterday steve liesman with his interview, with of course mr. erskine, mr. bowles and lloyd blankfein was an a plus, plus,
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plus, plus, plus and i particularly enjoyed some of the dialogue between mr. blankfein and steve regarding the fiscal cliff. debris there is an upside to the fiscal cliff but i think traders on this floor, they look at the fiscal cliff in a much different way. i'll tell you what i mean by that. we have fiscal cliff but what traders say is, that the real issue is the philosophical cliff, and i'll tell you what i mean by that. the fiscal cliff issues, you look at the markets, they seem nonplussed, okay? if build blankfein's right there's a bigup side if we solve it. if t wasn't that many days ago we were hovering at multiyear highs. i personally think the equity market's hanging in just fine. one would think if mr. blankfein had it pegged, there would be more pressure to allow for the rally. here's what traders say. this isn't political but maybe it is. they say if the president wins,
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he has not been very generous in reaching across to business. so they think the fiscal cliff in the little terms becomes a big philosophical issue for a president that doesn't have to worry about re-election. if he didn't try to embrace business in the first term, will he do it in the second term so really this election to traders is a biggie in terms of the market direction and how they trade because they're looking at it more as a philosophical cliff between pro-business and not as pro-business regarding mitt romney and the president. now, how can we prove this? of course we can't, and maybe right when we get close to the election, if the results seem more obvious, maybe the market will make a move one way or the other but there are so many variables. of course we've seen many sessions where what happens on december 31st could be changed in april and retroactive. does this all sound complicated? it is, and that's why markets are so great. we just never know exactly how they're going to end up. back to you, carl. >> you got that right, and by the way if pat sajak ever needs
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a replacement i think you're the man. great work with that board. see you in a minute. the u.s. is declaring war on cyber attackers saying hackers gained access to our power grid, our water plants and a lot more. find out where the threat is coming from and what's being done to fight it. next. and then later how best buy is planning to turn the tables on amazon. if that's possible. "squawk on the street's" back in a minute. thor's couture gets the most rewards of any small business credit card. your boa! [ garth ] thor's small business earns double miles on every purchase, every day! ahh, the new fabrics, put it on my spark card. [ garth ] why settle for less? the spiked heels are working. wait! [ garth ] great businesses deserve the most rewards! [ male announcer ] the spark business card from capital one. choose unlimited rewards with double miles or 2% cash back on every purchase, every day! what's in your wallet? [ cheers and applause ]
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defense secretary leon panetta issuing the warning that the u.s. is facing a possibility of cyber pearl harbor. our eamon javers is live in washington with more on what took people by surprise when this came out. >> that's right, carl, it was a landmark speech by defense secretary leon panetta in new york addressing a business group and making a point the united states needs to do more to fend off a potential cyber attack and panetta went further than he's gone before saying the u.s. has been aware of specific incidents where attackers tried to gain control of american infrastructure assets. >> we also know that they are seeking to create advanced tools to attack these systems and cause panic and destruction and even the loss of life. >> panetta also saying the key for american defense in this cyber war is a partnership between the pentagon and the
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u.s. business community, the pentagon saying they need to work with american companies in order to fend off the next attack. >> we've got to work with the business community to develop baseline standards for our most critical private sector infrastructure, our power plants, our water treatment facilities, our glass pipelines. >> and carl i spoke to folks over at the chamber of commerce this morning, the chamber says they support the broad outline here of what panetta is trying to do but they're concerned about increased regulation on american companies that could be onerous. they want to find some kind of solution to this problem where everyone can agree but companies not necessarily jumping on board automatically with what leon panetta was saying last night, carl. >> it comes in the same week where the house support committee came out on huawei. they're getting more traffic in
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the beltway. >> the burden is on ceos and executives to find out how much is their responsibilities, buying telecommunications, do they have a burden to prove the telecom gear doesn't have chinese back doors that can allow chinese hackers into american infrastructure systems. that's a question for corporate america to answer. what leon panetta was saying he wants new legislation that would allow the united states government and military to partner with companies and also wants to recruit a new stable say of cyber hackers who can work for the pentagon in fending off some of these threats so a whole new dynamic in this discussion after last night. >> that's definitely something to watch and hopefully enough gets done before something serious does happen. thank you so much for your report. good stuff. it's the startup that's getting your finances in shape, the founder and ceo of learnvest is here to tell us how she's bringing investigating and financial planning to the masses and wracking up millions in vc
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♪ this morning, "squawk on the verge" features a startup described as weight watchers meets personal finance. learnvest was started in 009. it is a registered investment adviser looking to make financial planning a consumer product for the masses. alexia von tobel is the founder and ceo of learnvest and joins us this morning at post nine. what a pleasure to have you. >> good morning, thanks for having me. >> you got this idea when you were still an undergrad at
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harvard. >> that's exactly right. >> how did you come up with the idea? why did the business plan seem to work? >> i just realized that so many people have questions about money. i had questions about money. we don't learn about it in high schools or colleges across the country and where do you go if you don't have millions of dollars literally who do you ask all of your money questions to make sure you're getting trusted and unbiased advice. >> you had been a trader at morgan stanley? >> i was in the analyst program and went back to haar ward business school. >> you brought in some people who worked at "huffington post" and "daily candy." >> yep. >> how does the product work and how is it separate from the gazillion other financial planners? >> if you're a free user, you create an account and link all of your finances and see your entire financial life for free, our average user is logging in almost every other day, a big section of them. if you want to upgrade, which means you have questions for a planner you pay a small fee
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either $89, $350 or $600 per year based on complexity, and we give you a dedicate the certified financial planner on our staff and they answer all your questions and they're literally on call for you whenever you want them via phone and e-mail. >> the average user is, i expected them to be closer to retirement. they're relatively young. >> our core user is in their late 30s. they have over $100,000 in salary. it's a really well-educated, smart user who simply just wants to go and learn about their finances across all aspects, insurance, estate planning, investment, retirement, we do it all. >> is the typical client one whose finances are already in need of repair? >> no. >> or people who have never given this sort of stuff much thought? >> if you think about it for the 99%, without being political, where do they go to get access to experts? we literally see doctors who have $200,000 in debt to individuals who have more than $10 million in assets. it's astounding, but it's truly consumable, it's on demand, easy
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to access, it's affordable and it's at your fingertips. >> your goal it says here is to be one of the largest financial planning companies in the country. >> that is a big goal. >> who is afraid you exist? who should be afraid? >> i don't know. what we're doing is a big benefit and there's a lot of white space, a lot of financial institutions serving high net worth individuals. what about the rest of the country, and so there's lots of different mom and pops out there, there are some really great brokerage firms we're working with, but i think no one should really be afraid of us. we're going after this market that no one is really served. >> you raised some 20 million in financing last summer. >> yep. >> valued at $100 million. for all of the people starting a new business, what is your best advice to make that leap where small seed money turns into real money? >> i think you have to have a really clear plan. you need to know the space in and out. don't jump to start a business, if you haven't thought through every aspect of it, because it's
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a massive commitment and pick a business that you love. i am so passionate about this topic, financial planning should not be a luxury. it should be accessible to everyone in the country so that's why i get out of bed in the morning. >> alexa von tobel, learnvest the founder and ceo, we'll be watching you closely. >> thank you very much. >> thank you for coming by. with k best buy get the upper hand on amazons? 'going to try. we'll tell you why it could make your holiday shopping more affordable. plus the bell will sound across europe in about four and 50 seconds. the dow is now up ten points. don't go away.
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find what's next for your business at chase.com/mainstreet welcome back to "squawk on the street." i'm mary thompson with a market flash, looking at shares of progressive, the insurance company for the third time since 2007 issuing a special dividend to holders, $1 a share. it reflects its strong operate. ing and investment results, the stock is up 2.5% on the news. carl, back to you. >> mary thanks so much. simon joined us here at post nine. you can almost set your watch on how the dow begins to fade as europe closes, happening again today. >> actually trading into the close europe has also fallen, it's very interesting. we were doing much better than we are at the moment, a little bit earlier in the session. what's interesting is a lot of the news for europe is actually coming out of tokyo, out of the imf meeting, you have this, next week is the big summit of course and mass protests on the streets of greece on thursday, as that kicks off in brussels, and over
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in tokyo today, lagarde again for the imf indicating a change in position that greece and spain should be given more time and one point sitting next to the german finance minister on a panel and disagreeing really vehemently with each other about what should happen. he is saying to her look the troika is still in athens trying to work things out. please don't preempt their report but things are shifting there and in that meeting at that meeting for the first time a senior european official has detailed how a bailout for spain might work. ollie wren for the first time giving an indication there and you see the spanish yields interestingly are not a terribly risk on day for the market have fallen into negative territory for the week as we head into the close, down to 5.64. they have a big auction coming through next week which will clearly be one to watch given where we are at the moment.
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what is interesting is that greek stocks have also risen substantially today but i'll get to that in a moment. first let's have a look at the map as we count you out on the close, greece is higher, greece on the bottom right-hand corner, 30.2% gain. everybody else is in the red. here are some of the movers of the day. might be from what you got from lagarde in tokyo suggesting greece should be given more time. hel helenic and national bank of greece in positive territory. the reason you have the outperformance is because they fell so hard earlier in the week. in fact the ase as we got the announcement there would be a 24-hour strike on thursday when the summit begins in brussels so in athens all of the public sector unions will take to the streets again which could affect markets. the other major thing we had the
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beginning of the session when we came here 6:00 a.m. at the new york stock exchange the banks were flying high in europe but faded into the close. lloyd's banco popular, up 2%, 3%, 5% but sunk back down. the reason they were higher a major reweighting from deutsche bank, one of the biggest operators within europe suggesting now is the time for europe to enter tactically positive and this is the argument the top 600 blue chips in europe trade 11 times earnings, should trade 12 1/2 times because they believe there will be an unlocking to the risk premium and believe you should watch what's happening in italy. i don't know if that's true or not but they are suggesting you should upgrade the banks or go longer over the banks and they are downgrading health care, food and beverage, they go underweight so just a call in
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the sea of calls. it did move the markets earlier, interesting they sold into the banks. >> have a great weekend. see you next week. capital markets op-ed, convergex. >> i'm not on old media but what we chatted about earlier today is making quite a stir. >> joe biden's performance. >> listen, i forgot to mention one thing. i know the reviews in terms of the moderator, abc news, i don't watch abc news so i don't know her. i know if you were moderating that you would have not allowed the interruptions, 86 interruptions and i know it will be a debate what the role of the moderator was. i know the way you would have handled it, you would have done a better job. >> i think she was great but it's nice of to you say. >> you would have allowed the candidates -- talk about this, conjvergix put out a great report every day, fascinating stuff. did you see today's stuff? it's fascinating, so much concern about fiscal cliff and
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what may happen and look at these numbers in terms of they looked at the original information came from the employee benefit research institute. only 58% of americans are saving for retirement. 48% of the workers aged 45 plus have less than $25,000 saved. i worked in the financial services money management industry for decades. this number was shocking to me when i saw it this morning. i had to go through it again. 38% of u.s. workers only 38% participate in the 401(k)s where they had that opportunity to do so. 34% of savers have dipped into their savings already to try to do, to maintain their lives. here it is. you think about employment, you think about job growth, here's the question. when you look at those numbers the natural evolution of those that are going to be leaving the workforce to leave jobs for those that are entering, this is the next major crisis coming. you'll have on paper given the natural evolution people leaving the workforce, they can't.
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this data tells you they can't. there's no way the employment data can go down when you don't have the natural evolution of people leaving the workforce that should. >> it's a huge demographic issue that they won't have enough money but also going to be a bigger consumer of health care. >> because life expectancy has gone up and it will continue to go up despite what may or may not happen in terms of retirement savings. life expectancy goes up. these numbers again this stuff is great, these numbers were surprising to me and i know how many people lack the ability or lack the mentality to put money away but this is scary, and this is going to be the next crisis ahead if something doesn't change. >> good stuff. don't go too far. >> i'm not. >> bob pisani, how are you doing? >> we're moving down a bit and moving down on the banks, that's the problem today. wells fargo we watch religiously because it's a play on housing, we have a little bit of a plm, low interest rates is great news for me and you as a consumer, not so good as a bank.
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part of the weakness we're experiencing in the middle of the day is due to wells fargo had earnings out, don't worry whether they beat by a penny. we'll show you what matters here. notice the regional banks are noticeably weak today because a lot of stuff is starting to dawn on people about what this low interest environment is meaning for the banks as we're seeing it. here is the bad news for the banks. lower rates means lower profits for the banks. it's really that simple at this point. i've refinanced my mortgage in the last few months, had a 4.8% mortgage and refinanced it to 3.5%. i'm happy. if you're a bank, you're replacing a higher rate mortgage with a lower rate mortgage, that's not good for you. that's not good for your profits overall, and this is happening right across the board with margins for banks. so think about the spread between what they pay their depositors and what they lend out the money for is getting smaller and smaller, that's called the net interest margin. that's a problem if you're a bank overall here. here is the good news, this is what i'm happy about because i'm
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watching mortgages and home ownership and the home builders, home mortgage lending is going up. looks at wells fargo last year at this quarter, they did $89 billion in mortgage lending. this quarter they did $139 billion. it's up 45%. that's good news. that's what you want to see. so in terms of housing, it's moving in the right direction. it's starting to just hurt bank profits and that's why the banks are down today. also another reason the banks are down today, they ain't cheap anymore. let's move on here, just put up regents financial, for example, i'll show you several of these, regents financial has been up almost 75% so far this year. well that's my point. these banks slowly people have been buying them playing partly the home recovery and so they're not that cheap anymore. let me show you a couple of things, another thing that's moving today very interesting, a little bit of good news, the transports are doing very well. j.b. hunt had a decent earnings
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report, this is one of the guys, big on the intermodal plays, these guys move stuff using different vehicles, they use trucks and rail and move a lot of freight around. the report from them was not as bad as people anticipated. the transports have been weak recently, anticipation of a slower economic recovery. it wasn't as bad. it's up 7%. the street was surprised by their earnings report and all these stocks that are in this group, hub group is another competitor, they do a lot of intermodal stuff as well, up 4% today so this say little bit of good news and again the transports outperforming the industrials today. >> carl has great points, the net interest margin, there was an analyst on air earlier today said if you look at wells fargo and jpmorgan the numbers are good for investment banks, and i got to tell you if you know morgan stanley's business the net interest margin is going to have a big impact on them. i disagree with that analyst. it will impact morgan stanley. >> the combination of that and slowdown in commercial lending. >> absolutely. net interest margin will be a
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negative impact at morgan stanley as well. >> thanks, guys. best buy often called a show room for amazon says it plans to match the prices of internet competitors like amazon this holiday season, an attempt to turn more shoppers into buyers. herb greenberg is on the case and joins us. i wonder, can they do this? >> carl, if they decide to do this, remember that was a story in the "wall street journal" this morning. certainly they can do it and it will be great for consumers, but you know, if you look at the margins, already on an operating margin standpoint, 1.5%, so there's very little wiggle room but you could also argue either this is a brilliant move if it creates volume or a sign of desperation or it's both. so you know, you have to think about whether it will pay off in the long run, will they generate more traffic or will they just hold on to the shoppers that are in the store who would have gone
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somewhere else. >> what is your take on their ability, herb, to manage the real estate in the way that they need to? i mean to close as many stores as some say they need to in a reasonable amount of time? >> well, i think you know, the question is, what happens to those leases? i think that they can go ahead and close, i think they need to shrink, look, i think -- carl, can i be honest with you? >> yes. >> i don't think anyone really knows what their strategy is and whether they can pull it off, with the real estate question. i think the other question is still more significant because here's the deal. if they do this matching, that is matching amazon, which no one does right now for the most part in their stores. is it just holiday season, did they start a trend and now people will demand it after holiday season. i think that's the significant part of the story. >> would you rather short best buy knowing the uncertainties in the business? they talk about selling kindles
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at costs. >> we know this, amazon will go on losing money as long as it can. i think if best buy can't continue to turn itself around and make money, people will give up on it as an investment. >> herb, it's a great story, it's going to stay with us. see you later, herb greenberg at hq. want to check on how today's ipos are trading, workday sharply higher, 60% at 45.08 after pricing the range originally as low as 21. already the biggest ipo since facebook, an amazing story here today. only four days until mitt romney and president obama go head-to-head for the second time, ben labolt, the nas press secretary for the obama campaign will join us live after the break and give us his take on last night's debate and how the president is prepping for the last one. we'll be right back.
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up the top of the hour will the ipad mini deliver an october surprise and restart the rally in america's most valuable company? the first bank results are in but which should you own for the long haul and wall street's biggest bull tells us what will drive stocks to new highs this year. carl this target alone is going to shock you. promise me. see you in about 15 minutes. >> i love it when you promise to shock us. scott, see you at the top of the hour. joe biden, paul ryan discussing everything from health care to unemployment and taxes in last night's vice presidential debate. listen in to one of the most
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contentious moments. >> you can cut tax rates by 20% and preserve the important preferences for -- >> not moth mathematically possible. >> it's been done before, precisely what we're proposing. >> it has never been done before. >> it's been done a couple of times. jack kennedy lowered tax rates. >> oh now you're jack kennedy. >> the most tweeted about moment last night. ben labolt is the obama for america press secretary and joins us from chicago. ben good morning to you. >> good morning, carl, thanks for having me back. >> i agree with what "the journal" said, this was a debate. we did get the back and forth as messy as it was. >> no question. >> our first question on style, i walk in this morning and fire up my computer there's a joke, what's joe biden's favorite candy? snickers. did you guys try to manage his laughter? did that get out of hand? >> you know, republicans like to talk about happy warriors and i think that's what we saw last night. look the vice president is
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authentic. he didn't bring a bunch of canned political talking points. what you see is what you get. people know he's telling the truth and congressman ryan brought about a bunch of canned talking points and they didn't hold up. he couldn't defend the $5 trillion tax cut for the wealthiest. >> people talked about him going in, biden going into this debate, ben, with a gravitas advantage. he is the 15th longest serving senator and giggling about iran. was there any discussion afterwards that that was overdone? >> you know, i think this whole conversation this morning is entertaining. you know, the same ticket that's been out there saying they're going to stand up to china had spent the entire morning whining about laughing and smiling, if they can't handle a little bit of that, how are they going to stand up to china? how are they going to stand up to iran? >> well, good point. i want to bring your attention to something that happened on our air yesterday, alan simpson, erskine bowles talking about the simpson-bowles plan this time with the involvement of some of
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the nation's most high-profile c ceos. >> they worship the god of re-election and figuring all that and how to duck every hot issue before november 6 and then erskine says the whirlpool of 7 trillion bucks is going to hit us like a rainstorm. >> classic alan simpson. ben we're dealing with a lot of companies and ceos here who at least say their inventory decisions are being held back out of uncertainty over the cliff. is this going to get addressed in a major way in the next debate and if so, is it going to be in the framework of a revamped simpson-bowles? >> well, listen, the president has called for congress to take immediate action to address this. i think in some ways, the election is providing a big choice to break the economic stalemate in washington between two different visions here. we can continue to build the economy from the middle class out or the top-down. you did hear some fiscal discussion last night, we've got two different approaches, the
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president has laid out a $4 trillion deficit reduction plan and our view the plan that romney and ryan have laid out is irresponsible, starts with $5 trillion in additional tax cuts, $2 trillion in additional defense spending beyond the level the pentagon asked for and they're refusing to ask the wealthiest for a dime and the simpson-bowles plan makes clear you need a combination of tough spending cuts and revenue in order to get the job done. >> does it make a difference if ceos are now involved or not? >> well certainly i think this is, i think this is a helpful effort. they've endorsed an approach that we followed the basic model of. you know, romney signed the norquist pledge which means he's not going to ask for a dime in revenue from the wealthiest. it's obviously discord aant wit the approach that the ceos and bipartisan deficit commissions laid out. >> interesting. finally the president has said in a recent radio interview that
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he was too polite in debate number one. does that change, does the strategy change in debate number two? >> well, ultimately i think you view the goal of the last debate is laying out the choice in this election, the economic choice and his plan to restore economic security for the middle class. we have seen a brazen attempt by the romney/ryan ticket to rewrite their positions and re-present them and repackage them in the past week. i think the president will correct governor romney when he misleads the public about his positions in the next debate but his goal will be the same which is to lay out his plan to restore economic security for the middle class. >> we can't wait to see that. i'm sure you already know the television ratings have been off the charts. >> they have. >> ben have a great weekend. see you soon. >> thanks for having me. >> ben ba locality in chicago with the obama campaign. when we come back, the man, the myth, the legend, larry kudlow at post nine, we'll get his take on the debate and what it means for the race as a whole, in just a moment.
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the heat was on at the vice presidential debate last night as you probably know from interruptions to laughter and finger pointing there was not a dull moment. he watched it with us last night, larry kudlow here at post nine this morning. some of the key topics are not the ones we might have expected going in. >> right, very odd situation, we thought it would be domestic, fiscal, taxes, budgets. turns out it was foreign policy i guess because martha raddatz
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wanted to do it that way. i believe this debate was basically over right at the beginning of the debate, because when we got onto the subject of benghazi, ryan just ripped into the administration, and unfortunately vice president biden misspoke on two key points. he misspoke on two key points. number one he said we didn't get intelligence until much later. we have now known that that is not the case. they had clear intelligence and pictures in the first 24 hours. second, he said that the consulate did not ask for additional security. we now know beyond a shadow of a doubt they did on several occasions, and the white house turned them down. this is going to follow vice president biden all week long, and ryan, i think we have a clip of this whole thing, ryan was prepared. he was on his game on foreign policy. watch what happens when paul ryan surprised everybody with his knowledge of foreign affairs. please take a listen. >> our ambassador in paris has a
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marine detachment guarding him. shouldn't we have a marine detachment guarding our ambassador in benghazi, a place where we knew that there was an al qaeda cell with arms? this is becoming more troubling by the day. they first blamed the youtube video, now trying to blame the romney/ryan ticket for making this an issue. >> and i think that the vice president, who has not faced the press since the benghazi incident, neither has the president faced the press, you know, we had a million tweets last night. we had so many tweets and believe me, i didn't have to cherry-pick the tweets. i've been very critical of this benghazi. people are furious in this country. so right there at the top of the debate on a subject that we didn't expect to happen, i believe ryan took the lead and he never relinquished it. >> larry, i mentioned earlier in the hour about what joe biden was last night, what he was years ago, raised huge amounts of money from financial services, was not that same
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person that you saw last night with the smirking, the laughing, sort of making fun of his opponent three or four -- let's say four or five years ago. you knew and you know joe biden very well. >> i know him very well. >> are you surprised he is not the same guy he was five years ago? >> first of all i will say at a personal level how much i like joe biden and how good to me he has been when he ran in 2008. we interviewed him several times. i'm always bumping into him in the locker room in washington. he actually encouraged my career years ago whether or not he meant it or not it was a nice thing to say. i think he was under tremendous pressure last night, gary, to resurrect the democrats' failing chances. obama had a bad debate and a bad week after the debate. romney is on an absolute tear right now. so i think joe is trying too hard. that's what i am saying. he was trying too hard. he was pushing it too hard. the snarky laughter was really out of context.
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it looked awful, probably cost him the polling on the debates. it's too bad. after the debate, it's funny, ryan made his points on the free market economy and tax reform, and biden made his points on don't mess with entitlements and we're going to raise taxes on rich people. i'm not sure there was a winner and a loser in those debates. martha raddatz didn't let either of them really conclude their thoughts because she wanted to go back to foreign policy. >> sure. >> you can say did ryan win that debate? i think he did. you could also argue did biden lose that debate, i think that's possible. the bottom line to me is it will not stop mitt romney's momentum. >> how does benghazi resonate in swing states where there are very few undecideds and when the economy is still the number one topic. >> i'll guess a lot of what we used to call reagan democrats or henry jackson democrats or joe lieberman democrats who may be fine on medicare and social
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security, but are hawks on national security, i think they are furious. i think they'd see this as a coverup. i think they see the administration has been lying every step of the way and i think it's going to really damage the incumbent. i don't think the. knows yet how much this is damaging him and the more they try to distance themselves and come up with phony arguments like last night, the worse it's going to get. >> is benghazi going to be the main topic on tuesday's presidential debate? >> well i reckon so. it's certainly going to be in the game. i don't want to make any predictions. all i'll say is paul ryan stood toe to toe against the foreign policy guy last night and ryan did pretty well. >> just in time for foreign policy to be the topic of the next debate. thanks a lot, larry. for full discussion of the debate and former cia intelligence officer who developed a program to detect deceptive comments, tune in tonight to "the kudlow report" at 7:00 p.m. eastern on cnbc.
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